Mastercoin Foundation Vision Statement:
Accelerate innovation throughout the world by building a global value exchange platform in an open, decentralized, transparent way.
Mastercoin Foundation Mission Statement:
To become the standard protocol for smart properties and virtual currencies on the Bitcoin network by providing peer-driven development of Mastercoin-enabled distributed applications that are easy to use, secure, and decentralized.
The Idea of Mastercoin
“The Second Bitcoin Whitepaper” (version 0.5) written by J.R. Willett and made public in January of 2012 laid out the basic ideas behind Mastercoin proposing that the existing Bitcoin network could be used as a protocol layer for higher level protocols to enable new rules for contracts thus enabling the creation of new currencies without changing Bitcoin itself or requiring the creation of an alternate blockchain to handle new rules. If you are familiar with the OSI protocol stack the relationship between Bitcoin and Mastercoin could be visualized as such:
The rationale behind J.R. Willett’s proposal addressed several issues: improve the stability of Bitcoin through the issuance of new currencies which have evolved into Contracts For Difference; benefit Bitcoin holders by adding new value to the Bitcoin network; provide a mechanism by which to fund software development, marketing and maintenance of the new protocol layer(s); and provide for a way by which early adopters would benefit financially.
With this new protocol layer, Bitcoin users could go abóut creating new smart contracts within the Bitcoin ecosystem. The smart contracts protocol enabled via Mastercoin encapsulate the facilitation, verification and enforcement of contracts thus enabling the electronic exchange of smart properties such as: stocks, bonds, real estate, intellectual property and so forth.
The following year on July 31, 2013 v1.0 of the same whitepaper was released and included a call for funding the Mastercoin project. A Bitcoin “Exodus Address” was created and anyone sending Bitcoins to this address before August 31, 2013 received 100X that number in Mastercoins, as well as extra Mastercoins depending on the week during which the send transaction took place.
Exodus: Moving from Idea to Funding
July 31, 2013 marks the inception of the fundraiser the Mastercoin project when J.R. Willett’s idea moved one significant step closer to reality. On August 15th the first ever Mastercoin transaction was recorded when CryptoBegger was sent 1 Test Mastercoin. To this point the 1EXoDus address had received significant investment from Mastercoin’s founder and other individuals, however the big push came a presentation of Mastercoin to BitAngels in the middle of August 2013.
The total funds raised peaked at approximately 4740 BTC which resulted in the creation of about 563,162 MSC and another 10% of that initial amount in development Mastercoins will vest over a period of time. No more MSC will ever be created from the 1EXoDus address.
Mastercoin Foundation and Board
The Mastercoin Foundation came to existence in September 2013 with seven volunteer Board members:
Sam Onat Yilmaz
Today the role of the board is to guide strategic decisions and partnerships, approve bounties as suggested by the community, as well as oversee the general budget and the hiring of operational staff. The board is actively working to minimize its temporary central role in the Mastercoin protocol – both controlling the Mastercoin Spec, and awarding bounties, is scheduled to be turned over from the board to full community control via Proof of Stake voting. The holders of Mastercoins will be able to fully control the evolution and development of the protocol and associated software.
If you wish to reach our board members for a discussion or proposal send an email to firstname.lastname@example.org.
The Bounty System: 1st Code Contest
On October 15, 2013 the final awards were announced on bitcointalk.org for the contest participants. The winners will share in a prize of 180 BTC or about $25,000 at the time. Five developers split the prize for this contest and some of the main Mastercoin websites and GitHub code repositories in use today were established.
Here is a list of the applications, websites and libraries which resulted from the contest:
Mastercoin-ruby: A ruby library to parse MasterCoin data. Source
Masterchest Library: A .NET DLL that gives potential new mastercoin developers the ability to use functions with a single line of code. Source
Masterchest Engine: A blockchain scanning & mastercoin transaction processing engine. Source
Mastercoin-tools: Package of mastercoin related tools including tx parser,web UI and APIs; uses package sx, libbitcoin. Source
Mastercoin-explorer.com: A Ruby on Rails application to index all Mastercoin transactions and show other data. Source
Mastercoin-wallet: A (QT-based) Mastercoin thin-client implementation. Source
Masterchest.info: a block explorer for displaying mastercoin transactions and address balances/history. Source
Masterchest Wallet: a desktop wallet for mastercoin. Source
Masterchain.info: web UI for mastercoin-tools. Source
Distributed Exchange Code Contest #2
The current contest is aimed at developing the first commercially viable and scalable distributed exchange on the Bitcoin network allowing owners of Mastercoins and Bitcoins to trade. Later on this capability will be extended to Smart Properties such as stocks, bonds, currencies and other financial contracts. The contest will award out a total of 300 BTC, which originally was valued at around $50,000 at the start of the contest, but has risen significantly since.
The capability is not simply a pipe-dream, our developers have already conducted the the first distributed exchange using Test Mastercoins and Bitcoins. The acceptance criteria and thus the milestones for this contest are the following:
Minimum one PC wallet (for both Linux and Windows) which can generate simple sends and the buy/sell messages required for the distributed exchange, using agree-upon multi-signature format.
Minimum two websites parsing such messages, and the resulting balance transfers.
Minimum one website showing BTC/MSC price charts derived from these messages.
Minimum 10 days of real-world usage with no major problems.
High bar for usability.
Mastercoin Gets an Executive Director
Ron Gross is an early investor in Mastercoin having participated in the August 2013 crowd-funding event and a founding member of the Israeli Bitcoin Association. After dedicating a few months to the Mastercoin effort Ron was asked by the Mastercoin Board to step up to the role of Executive Director in November 2013. You can read Ron’s acceptance letter here. Since taking on the role Ron has taken steps to rally a large number of individuals from across the world to join the development of and realization of the Mastercoin vision.
The group of individuals contributing to Mastercoin today easily numbers in excess of thirty people. While there are several developers working on the Distributed Exchange contest and more developers are joining the Mastercoin open source community. From an operational standpoint we have recently added Taariq Lewis as the Smart Property Lead, Aric Fedida has joined as Head of IT and Dominik Zynis as Head of Communications. We have a large group of people helping in areas ranging from documentation, project management, development of the Mastercoin protocol specification, communications media (videos and Web), and opening local Mastercoin chapters. We also have blogs in Chinese and Hebrew, and many more languages coming soon.
Currently, there are four Mastercoin chapters in: one in China, one in the USA, one in the UK and another in Israel. If you are interested in forming a chapter check out the direction on our wiki.
Mastercoin and the Future of Bitcoin Commerce
Mastercoin’s vision is to “Accelerate innovation throughout the world by building a global value exchange platform in an open, decentralized, transparent way”. That can be achieved by enabling investors, entrepreneurs and workers to freely exchange knowledge, time, effort and money globally. With that in mind we have set milestones after the Distributed Exchange functionality is in place to bring about new capabilities inherent within the Mastercoin protocol that will capture value creation in a global context, in particular:
Create and track “Property creation” logic (stocks, bonds, deeds, financial contracts) and integrate with distributed exchange
Create and track “Savings Wallet” logic
Create and track “Data Stream creation and display” logic
Create and track “Distributed Betting” logic
Create and track “User-Defined Currency” logic
Create and track “Distributed E-Commerce” logic